Andrew O'Donnell, Edney Ryan Legal TeamA builder must take out job-specific insurance for home building work valued over $20,000, under the Home Building Compensation Fund (previously known as Home Warranty Insurance).

If you are a home owner, check that a valid insurance certificate has been obtained for the work you want done. Do this before work starts and before paying any money. Without it, you will not be able to be compensated for defective or incomplete building work if the builder becomes insolvent, dies or disappears. Home owners should be wary of any builder or tradesperson who says they do not need insurance if the value of work exceeds $20,000, or who suggests you obtain an owner-builder permit while they carry out the work for you.

Home owners should ensure that:

  • the certificate of insurance is an original issued by the insurer,
  • the certificate is issued for your specific project – including the name of the contractor, home owner, property address and total value of the contract,
  • the builder’s name on the insurance certificate is exactly the same as that on the building contract and the builder’s licence,
  • the certificate of insurance is valid by contacting the approved insurance agent or using the Home Building Compensation Fund Certificates Register.

For home-owners to safeguard their position under an insurance policy, they must immediately notify the insurer when they become aware of defective or incomplete work.

Where the contract price does not exceed $20,000 there is no legal requirement to obtain insurance under the Home Building Compensation Fund. There are also some exemptions, for example multi-storey residential buildings more than three storeys and containing two or more dwellings. For more information visit the Home Building Compensation Fund website.

For advice on this or other property-related matters, please contact us on (02) 9908 9888.